Getting the business to own compliance is very difficult to do in a large
company. The way that HII operationalized compliance was key to the
effort’s success.

Huntington Ingalls focused on leveraging internal resources more
effectively, saving $1.4 million while still becoming more proactive and
responsive to the needs of the business.

Approximately 40 core elements were
identified to make the core principles
actionable. Then the compliance team
sought the buy-in of thousands.

To accomplish this, the law department designated
representatives and compliance liaisons for each core
element, and created proactive work plans—familiar
to every shipbuilder—that describe with specificity
every core element and establish annual training
requirements, risk assessments and performance
metrics. “The work plans force us to proactively
ensure that things are getting done,” says Boudreaux.
“We identify at-risk departments, establish metrics
based on risk and conduct a risk assessment of each
area. We proactively work towards getting it right.”
To ensure that compliance responsibility remains in
the hands of the shipbuilders, the legal department
also created compliance councils and made
compliance a significant factor in compensation.

“This type of preventive approach is a natural and
important part of an in-house law practice. The
management structure and designated ownership
around each element creates context, and gives a more
practical edge to our ethics messaging,” Hawthorne
says. It’s also more positive, he says, noting that the
program emphasizes recognition over policing.

By leveraging internal resources, HII was able
to significantly reduce outside counsel costs.

The law department had already begun workin this area. Now, compliance work originallydesignated for outside counsel is mostly handledby HII’s businesses. Because of the highdegree of ownership by the business,the compliance organization is lean,comprising three employees ascompared to an industry standard ofaround 20. When needed, they rely on a small,expert team of outside attorneys who know thecompany and its culture extremely well. In 2013, HIIrealized $1.4 million in savings on outside legal spendover 2012 expenditures, and its compliance budgetis more predictable and flexible. Hawthorne reportsimproved legal outcomes as well.

“We have reduced legal risks by
becoming more proactive and adept at
preventing, detecting and responding
to misconduct that could lead to more
litigation and enforcement actions,“
he says. The company is better equipped to
demonstrate “present responsibility,” which is defined
by federal acquisition guidelines and required for
government contracting.

“We had business problems that are common to most
companies,” Hawthorne says. “With great buy-in
from everyone in the company, from the board of
directors on down, the process turns out to be quite
natural.” n